Earnings Before Tax (EBT)
A company's profit after all operating and interest expenses, but before income tax is deducted.
What is EBT?
Earnings before tax (EBT), also called pre-tax income or profit before tax, is the amount of profit a company earns before paying income taxes. It is calculated as operating income (EBIT) minus net interest expense and plus or minus any other non-operating income or expense. EBT is useful for comparing companies across different tax jurisdictions or those with different tax situations — such as companies with tax loss carry-forwards that temporarily reduce their effective tax rate. The effective tax rate is computed as income tax expense divided by EBT. Analysts also use EBT as a checkpoint in the income statement to identify the tax burden's impact on reported net income.
Example
JPMorgan Chase reported pre-tax income (EBT) of approximately $21 billion in Q4 2024, with an effective tax rate of around 21% resulting in net income of roughly $16 billion. Comparing EBT across major banks helps analysts assess true profitability independent of tax structuring differences.